BUSINESS BLOGS
BUSINESS BLOGS
category: business
19 Dec 2008

It’s official: record labels are making a lot of money on YouTube, from CNET:

Universal’s YouTube channel is overwhelmingly the largest on the video site. The record label is the all-time most viewed channel, with nearly 3 billion views. Second-place Sony BMG, the second largest recording company, trails by more than 2 billion views with 485 million total views.

Of the top 10 channels on YouTube, 7 are music related. They include channels from Warner Bros. Records, Soulja Boy, and Disney’s Hollywood Records.

Only a few years ago, the record labels saw music videos as promotional vehicles only. Some argue one of the music industry’s biggest mistakes was giving videos away to MTV nearly 30 years ago.

That’s the key: the lesson from MTV was simple, by giving away the music or licensing it, the revenue the labels earned was capped, while MTV reaped the upside.  With YouTube, the labels stand to gain on the upside.  Of course, with YouTube garnering over 50% of the streams online, I am not surprised to see the following, either:

A music industry source close to the label said Universal will likely book nearly $100 million in revenue from video streaming this year. That figure includes video-streaming money from all of the company’s partners, such as iMeem, MTV, and MySpace. The source said, however, that most of the cash comes from YouTube.

I won’t comment on specifics, but indeed, if based strictly on revenue share, then YouTube would lead the way.  I think the record labels should get the smaller companies to chip in straight licensing fees, otherwise it becomes nearly impossible for the other destinations to generate tangible revenues, especially alongside YouTube’s contribution.

The fact that MySpace launched MySpace Music does create an intertesting storyline: after all, MySpace is kicking Facebook’s arse in the ad sales department, partially because they can leverage News Corp.’s sales organization whereas Facebook has to define a sales strategy and then build a team from scratch… so one has to ask: seeing how YouTube’s parent Google is a master of search advertising but a relative newbie at display/video advertising, can MySpace Music generate more revenue than YouTube?

Just asking.

Disclaimer: we provide video content to all of these sites… but we haven’t generated $100M thus far - not quite yet anyway…